· The downgrade reflects our opinion that the fiscal consolidation plan that Congress and the Administration recently agreed to falls short of what, in our view, would be necessary to stabilize the government's medium-term debt dynamics.

· More broadly, the downgrade reflects our view that the effectiveness, stability, and predictability of American policymaking and political institutions have weakened at a time of ongoing fiscal and economic challenges to a degree more than we envisioned when we assigned a negative outlook to the rating on April 18, 2011.

· Since then, we have changed our view of the difficulties in bridging the gulf between the political parties over fiscal policy, which makes us pessimistic about the capacity of Congress and the Administration to be able to leverage their agreement this week into a broader fiscal consolidation plan that stabilizes the government's debt dynamics any time soon.

· The outlook on the long-term rating is negative. We could lower the long-term rating to 'AA' within the next two years if we see that less reduction in spending than agreed to, higher interest rates, or new fiscal pressures during the period result in a higher general government debt trajectory than we currently assume in our base case.

Notice that there is not one single word about taxes in this summary ("fiscal pressures" simply means more spending in excess of revenue), and nothing about the 30-year causes of the current U.S. government debt, which are the combination of (1) radically reduced federal taxes on corporations and the richest percentiles of U.S. society (greatly worsened over the past decade — even the past four years); (2) the issuance of debt to fund military-industrial complex-related expenditures and the expansion of Bush and Obama era foreign wars since 2001; and, last but not least, (3) the borrowings by the federal government and various other forms of interest-free gifts to bail-out U.S. and foreign private as well as central banks since late December 2007.(About which, see last Month's Government Accountability Report Opportunities Exist to Strengthen Policies and Processes for Managing Emergence Assistance(GAO-11-696).)

Instead, to beat the dead horse, S&P warns that the "long-term rating is negative," that that it "could lower the long-term rating to 'AA' within the next two years if [S&P sees] that less reduction in spending than agreed to, higher interest rates, or new fiscal pressures during the period result in a higher general government debt trajectory…" (emphasis added).

Over this past weekend, Dean Baker of the Center for Economic Policy and Research asked "what S&P thinks it means by this downgrade"?

S&P's judgment is strictly political, and it means this: The U.S. government can rack-up debts via the three major categories I've just outlined, but, eventually, either Congress and the Administration will force the general population to pay-off this debt through concomitant reductions in their standards of living, and Congress and the Administration will prove their willingness to attack the general population as much as is necessary to do this, or S&P will downgrade the "creditworthiness" of the U.S. government even further — where "creditworthiness" really means the political commitment of Congress and the Administration to cater to elites.